"There is a significant opportunity for investors to deliver best-in-class purpose-built assets for rent at a time when there is very little new supply being developed"
- Oliver Knight - Knight Frank
Build-to-rent investment totalled £679m across 12 transactions in Q1 2026, making it the quietest opening quarter for the sector since 2018, according to Knight Frank's latest UK Build to Rent Market Update.
The subdued start follows a strong close to 2025. With several large-scale transactions currently under offer or progressing through legal processes, Knight Frank expects a stronger Q2, despite ongoing macroeconomic uncertainty.
Operational assets accounted for 61% of total Q1 investment, reflecting a clear preference among investors for stabilised, income-producing stock over development-stage risk.
Stock levels
Completed UK BTR stock now stands at 165,790 homes, a 27% year-on-year increase. A further 50,690 homes are under construction, with 126,565 in the planning pipeline, though converting permissions into new starts remains difficult, particularly for urban high-rise schemes.
The total number of BTR homes under construction fell 10% year-on-year as a result. Single-family housing proved more resilient, with 9% more houses for rent under construction than a year earlier.
"A further slowing in delivery is a direct result of changing regulation, increased cost and viability pressures impacting urban development in particular," said Oliver Knight, head of residential development and investment at Knight Frank.
"Recent planning reforms announced by the Labour government may improve the backdrop somewhat, but the magnitude of the impact remains uncertain. There is a significant opportunity for investors to deliver best-in-class purpose-built assets for rent at a time when there is very little new supply being developed, while the ongoing supply shortage should support occupancy levels and rental growth."
"Indeed, with mortgage rates remaining elevated, first-time buyer activity is likely to be constrained, which could support further rental demand through the peak spring and summer lettings season."
Guy Stebbings, head of build-to-rent agency at Knight Frank, said the Q1 data reflected a broader shift in investor priorities rather than a loss of confidence in the sector. "Although investment activity was more subdued in the first quarter compared with previous years, our findings demonstrate the continued appeal of stabilised income against a challenging economic backdrop."
"What we're seeing is a clear preference for assets that offer immediate cash flow and lower execution risk, supporting liquidity for high-quality operational stock. While BTR has the potential to deliver much-needed housing at scale, a more supportive economic environment will be critical for future growth, particularly in urban markets."
Debt market conditions remain broadly supportive, according to Lisa Attenborough, head of Knight Frank Capital Advisory.
"Despite broader geopolitical challenges, the debt market continues to demonstrate liquidity for stabilised BTR assets," she said. "We continue to see competitive pricing and terms from both senior debt and mezzanine providers. While swap rates have moved out which will inevitably impact the overall cost of debt, lender appetite remains unchanged from a demand perspective."
